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Sunday, May 10, 2020

Monthly Review Of DivGro: April 2020

Welcome to the monthly review of DivGro, my portfolio of dividend growth stocks. I provide a summary of transactions and dividends received in the past month. I also consider the impact on DivGro's projected annual dividend income (PADI).

In April, six DivGro stocks announced dividend increases. Additionally, United Technologies and Raytheon merged to form Raytheon Technologies (RTX), and the new company declared its first dividend. I was happy to see that my dividend payment increased as a result of this merger! The net result of these changes is that my PADI increased by about 0.1% in April. Year over year, PADI increased by 16.9%.

As for dividend income, in April I received dividends totaling $1,563 from 23 stocks in my portfolio, a year over year increase of 35%. So far in 2020, I've collected $8,576 in dividends or about 32% of my 2020 goal of $27,000.

DivGro's PADI now stands at $29,469, which means I can expect to receive $2,456 in dividend income per month, on average, in perpetuity, assuming the status quo is maintained. Of course, I expect the companies I've invested in not only to continue to pay dividends but to increase them over time! Also, until I retire, I hope to continue to reinvesting dividends, so DivGro's PADI should continue to grow through dividend growth and through compounding.

Dividend Income

I collected dividends totaling $1,563 from 23 different stocks in April:

Following is a list of the dividends I collected in April:
  • Automatic Data Processing (ADP)income of $54.60
  • Bank of Nova Scotia (BNS)income of $144.66
  • Chubb (CB)income of $18.00
  • Comcast (CMCSA)income of $46.00
  • Cisco Systems (CSCO)income of $72.00
  • AllianzGI Equity & Convertible Income Fund (ETO)income of $108.00
  • FedEx (FDX)income of $48.75
  • Illinois Tool Works (ITW)income of $64.20
  • JPMorgan Chase (JPM)income of $63.00
  • Coca-Cola (KO)income of $82.00
  • Main Street Capital (MAIN)income of $51.25
  • Medtronic (MDT)income of $54.00
  • Altria (MO)income of $168.00
  • Merck (MRK)income of $67.10
  • Nike (NKE)income of $3.68
  • Realty Income (O)income of $11.65
  • Oracle (ORCL)income of $42.10
  • Philip Morris International (PM)income of $140.40
  • Stryker (SYK)income of $5.75
  • Toronto-Dominion Bank (TD)income of $113.43
  • Eaton Vance Tax-Advantaged Global Dividend Opportunities Fund (TSM)income of $124.72
  • WP Carey (WPC)income of $52.00
  • Xcel Energy (XEL)income of $27.95
Here is a chart showing DivGro's monthly dividends plotted against PMDI. It is clear that quarter-ending months are huge outliers:

To smooth things out a bit, I create a rolling 12-month average of dividends received (the orange bars) plotted against a rolling 12-month average of PMDI (the blue, staggered line):

While it would be great if dividends were distributed more evenly, I don't want to change my investment decisions based on the timing or frequency of dividend payments.

Dividend Changes

In April, the following stocks announced dividend increases:
  • Costco Wholesale (COST)increase of 7.69%
  • International Business Machines (IBM)increase of 0.62%
  • Johnson & Johnson (JNJ)increase of 6.32%
  • Procter & Gamble (PG)increase of 6.01%
  • Toronto-Dominion Bank (TD)increase of 1.46%
  • Travelers (TRV)increase of 3.66%
I like seeing dividend increases above 7% and, unfortunately, only one of this month's increases is at least 7%. The arithmetic average of these increases is 4.3%, still well above the Consumer Price Index for All Urban Consumers.


I made no trades in April.

The stock market reversed course and wiped out some of March's losses, but I'm skeptical that this price action will comprise a sustained recovery. Economists at JPMorgan expect the economy to contract by 40% in the second quarter, while the April jobs report paints a dire picture. The US economy lost 20.5 million jobs in April, on top of 870 million job losses in March. This nearly wipes out the job gains of the last decade.

There was action in my portfolio, though, as my shares of Raytheon (RTN) got converted to shares of Raytheon Technologies (RTX), following the former's merger with  United Technologies (UTX). I was happy to see that my dividend payment increased as a result of this merger! RTX declared a quarterly dividend of $0.475 per share or $1.9 annualized.


It is worth looking at the markets to understand the environment we're investing in, even though I no longer compare DivGro's performance to those of the markets:

Mar 31, 2020
Apr 30, 2020

In April, the DOW 30 gained 11.1%, the S&P 500 gained 12.7%, and the NASDAQ gained 15.4%. These are astonishing returns for a single month! The yield on the benchmark 10-year Treasury note fell to 0.642, while CBOE's measure of market volatility, the VIX decreased by 36.2% to 34.15.

Portfolio Statistics

Based on the total capital invested and the portfolio's current market value, DivGro has delivered a simple return of about 43% since inception. In comparison, DivGro's IRR (internal rate of return) is 10.6%. (IRR takes into account the timing and size of deposits since inception, so it is a better measure of portfolio performance).

I track the yield on cost (YoC) for individual stocks, as well as an average YoC for my portfolio. DivGro's average YoC increased from 3.78% last month to 3.79% this month.

Another interesting statistic is percentage payback, which relates dividend income to the amount of capital invested. DivGro's average percentage payback is 16.5%, up from last month's 16.3%.

Finally, DivGro's projected annual yield is at 4.88%, down from last month's value of 4.89%. I calculate projected annual yield by dividing PADI ($29,469) by the total amount invested.

Here's a chart showing DivGro's market value breakdown. Dividends are plotted at the base of the chart so we can see them grow over time:

Looking Ahead

I'm happy that DivGro recovered some of March's losses. I'm concerned, though, with the dire state of the economy and that the stock market does not seem to reflect that state! I've decided to build some cash reserves in case we're presented with another opportunity to buy on the dip. We'll see how it goes...

Please see my Performance page for various visuals summarizing DivGro's performance.

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  1. Great results. I like your detailed breakdown of everything. Keep up the good work!

    1. Thanks for commenting, Compounding Norseman -- glad you visited and happy investment!


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